HELOC from Investment Property

Frederick, MD · Member since 2016 · 2 posts · 0 votes

Hello - I am trying to unlock some equity out of my house to purchase another property. My first thought is a HELOC but ive called 10+ banks and credit unions and none of them have a program for investment property. Has anyone gotten a HELOC from an investment property (not primary) in Maryland?

Or are there other options outside of refinancing? I don't think that's the move since my interest rate is at 4.3%

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Devin PetersonBusiness Member

Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 667 votes

The misconception about this product is that there are some lenders out there that have it available, but not the way you would want it. They are not DSCR piti wash programs. They consist of full underwrites and use the bottom line schedule E net income to qualify. If you are like most investors, you write everything and the kitchen sink off. SO odds of beating a 45% dti ratio are slim.

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Lisa Lister
Realtor · BRANSON, MO · Member since 2023 · 29 posts · 8 votes
3y
We refinanced our family home to invest in multiple investment properties in Branson, Missouri with no problems at all. I did use a local bank though, so perhaps you may consider that avenue locally to you, rather than larger institutes.
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Devin PetersonBusiness Member
Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 667 votes
3y
The misconception about this product is that there are some lenders out there that have it available, but not the way you would want it. They are not DSCR piti wash programs. They consist of full underwrites and use the bottom line schedule E net income to qualify. If you are like most investors, you write everything and the kitchen sink off. SO odds of beating a 45% dti ratio are slim.
[email protected]860-538-3672
ProAlpha Capital56 Reviews
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Lisa Lister
Realtor · BRANSON, MO · Member since 2023 · 29 posts · 8 votes
3y
Quote from @Devin Peterson:

The misconception about this product is that there are some lenders out there that have it available, but not the way you would want it. They are not DSCR piti wash programs. They consist of full underwrites and use the bottom line schedule E net income to qualify. If you are like most investors, you write everything and the kitchen sink off. SO odds of beating a 45% dti ratio are slim.
Great insight and advice!
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Brayden Hrycko
Lender · Allentown, PA · Member since 2023 · 207 posts · 38 votes
3y
Hey @Tim Triplett,
We'd have to go through the blended rate calculator to figure out if a refinance or heloc is better for you. There are investment heloc lenders out there but you'll need to qualify with your income for those. DSCR refinances will not require proof of income. It also depends on if you're refinancing a primary or investment. DSCR is for investment only.

Feel free to reach out. I’d love to help go through the rate calculator with you.
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Ryan Muska
Lender · Saddle Brook, NJ · Member since 2023 · 431 posts · 231 votes
3y
@Brayden Hrycko is right.
Make sure you speak with a mortgage professional and have them explain the different options and the pros and cons of each option.
The DTI is going to be a pivotal factor in a HELOC, whereas a cash-out refi into a non-income based loan (like a DSCR) will not take the DTI into account, at all! So just make sure you know what to expect!
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Kerry BairdPro Member
Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
3y
Try the small local community banks and credit unions close to the property. You might try HSBC, TD Bank and Navy Federal for starters.
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Kenneth Cheston
Real Estate Agent · Baltimore, MD · Member since 2020 · 65 posts · 24 votes
3y
@Tim Triplett
As other investors mentioned, make sure you understand the different products out there (HEL, HELOC, Cashout-Refi). It depends on your situation. I've done a HEL and HELOC for investment in Baltimore. I just recently got a HELOC for one of my duplexes with TD Bank. I didn't want to refi or HEL to hurt the cashflow but still have the ability to BRRR in the future. For my next deal I will cashout-refi to pay off the HELOC.
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Peter Vekselman
Real Estate Professional · Atlanta GA · Member since 2015 · 615 posts · 225 votes
3y
If there is equity in your investment property, you may just want to refinance it with another lender to pull the capital.
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Sara Frank
Realtor · Baltimore, MD · Member since 2020 · 255 posts · 182 votes
3y
Quote from @Tim Triplett:

Hello - I am trying to unlock some equity out of my house to purchase another property. My first thought is a HELOC but ive called 10+ banks and credit unions and none of them have a program for investment property. Has anyone gotten a HELOC from an investment property (not primary) in Maryland?
Or are there other options outside of refinancing? I don't think that's the move since my interest rate is at 4.3%

Depends on how you file your taxes. If you show enough income that your DTI wouldn't be an issue, there are lenders who will do a HELOC on an investment but they will fully underwrite it which means they'll deep dive into your income and DTI. If you're just getting started this could be fine, but a lot of seasoned investors get real good at writing off income which makes a cash out refi the only feasible option.
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Brittany MinocchiBusiness Member
Lender · Massillon, OH · Member since 2022 · 1k+ posts · 486 votes
3y
A few notes based on what I've read here:
1. There are HELOCs for investment properties, but (the the programs I know of) the property would need to be in your name, not an entity/LLC. Only single family properties are eligible, so it would be a no-go on 2+ units. Variable rate is more common with a HELOC, but there is at least one I know of with a fixed rate.
2. A HELOAN is another option that would be second position and wouldn't affect your first mortgage or its rate. Contrary to what many believe - not all of these programs verify income traditionally or factor in DTI. There are bank statement programs and DSCR programs for second position mortgages.
3. Expect rates for both of these options to be higher than what you'd find on a refinance. That said, even with a higher rate, it may still be more beneficial to go this route than a refi when you consider your blended rate. The higher rate will be on a lesser amount than if you refinanced your entire mortgage.
Hopefully that helps a bit, feel free to connect.
[email protected]330-354-6590
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